The Queen Enterprise wants to purchase a large rotary screw air compressor. The company has looked at models of two major manufacturers: Ingersoll-Rand and DeWalt. The projected cash flows for each are shown below:

-Calculate the total cost of ownership (TCO) for the Ingersoll-Rand compressor, with an annual discount rate of 8%. Calculate the total cost of ownership (TCO) for the DeWalt compressor, with an annual discount rate of 8%. Which model should be purchased based on these calculations?
A)Ingersoll-Rand product
B)DeWalt product
C)Either one can be purchased.
D)Neither, since both will incur enormous loss.
E)Need additional information to decide

Question

The Queen Enterprise wants to purchase a large rotary screw air compressor. The company has looked at models of two major manufacturers: Ingersoll-Rand and DeWalt. The projected cash flows for each are shown below:
 
-Calculate the total cost of ownership (TCO) for the Ingersoll-Rand compressor, with an annual discount rate of 8%. Calculate the total cost of ownership (TCO) for the DeWalt compressor, with an annual discount rate of 8%. Which model should be purchased based on these calculations?
A)Ingersoll-Rand product 
B)DeWalt product 
C)Either one can be purchased. 
D)Neither, since both will incur enormous loss. 
E)Need additional information to decide

Quizplus · Accepted Answer

The Ingersoll-Rand product has a lower TCO than the DeWalt product.

The Queen Enterprise Wants to Purchase a Large Rotary Screw